When you pay tax on savings, just spoken to HMRC

Dazed_and_C0nfused

pecunianonolet said:

Ozzig said:

Hoenir said:

pecunianonolet said:

Does anyone know if there is a different way to request a list of reported interest rather than calling and waiting hours to get through?

Keep a list yourself or suffer the wait on the phone. Alternatively employ somebody to do it for you. 

The catch is your list may be different from the list they have. I know mine was.

Exactly this is the reason and because I don't trust HMRC not 1 millimetre. They sent me a letter telling me about my new tax code and untaxed interest but it doesn't make any sense to my own record. 

The interest deduction in your tax code doesn't necessarily reflect the interest received though.

For some people it will a reduced amount 

For example where the interest is £2,000 this might result in a coding deduction of £2,000.  Or £1,500.  Or £1,000. Or numerous other amounts.

pecunianonolet

Dazed_and_C0nfused said:

pecunianonolet said:

Ozzig said:

Hoenir said:

pecunianonolet said:

Does anyone know if there is a different way to request a list of reported interest rather than calling and waiting hours to get through?

Keep a list yourself or suffer the wait on the phone. Alternatively employ somebody to do it for you. 

The catch is your list may be different from the list they have. I know mine was.

Exactly this is the reason and because I don't trust HMRC not 1 millimetre. They sent me a letter telling me about my new tax code and untaxed interest but it doesn't make any sense to my own record. 

The interest deduction in your tax code doesn't necessarily reflect the interest received though.

For some people it will a reduced amount 

For example where the interest is £2,000 this might result in a coding deduction of £2,000.  Or £1,500.  Or £1,000. Or numerous other amounts.

Correct, but neither the interest reported matches nor the reduction or anything else. Messing with tax codes is a never ending cycle and I need to put a stop to this before it gets out of hand (again). If they think I am due tax or underpaid, give me the number and I pay and they can leave me in peace after. I had 8 tax code adjustment letters already this tax year and we still have 3 months to go. Some due to their own mistakes. 

1spiral

pecunianonolet said:

 Messing with tax codes is a never ending cycle and I need to put a stop to this before it gets out of hand (again).

When I retired, my pension was below the tax threshold. Rather than leaving my code at 1257 (or whatever it was at the time) they reduced it to exactly match my pension so if my pension was 10000, my tax code was 1000. The problem with this was they set it around Feb and in April I get my pension rise so if my pension increased to 10300, I would be seen as over the threshold. From Apr until Feb I would then pay a small amount of tax only to get it all rebated next Feb when they adjusted my code to 1030 (to match my pension again) and the cycle restart again in Apr when I get my next rise. March is the only month I ever get a correct pension payment.

Dazed_and_C0nfused

1spiral said:

pecunianonolet said:

 Messing with tax codes is a never ending cycle and I need to put a stop to this before it gets out of hand (again).

When I retired, my pension was below the tax threshold. Rather than leaving my code at 1257 (or whatever it was at the time) they reduced it to exactly match my pension so if my pension was 10000, my tax code was 1000. The problem with this was they set it around Feb and in April I get my pension rise so if my pension increased to 10300, I would be seen as over the threshold. From Apr until Feb I would then pay a small amount of tax only to get it all rebated next Feb when they adjusted my code to 1030 (to match my pension again) and the cycle restart again in Apr when I get my next rise. March is the only month I ever get a correct pension payment.

If HMRC's estimate of your pension income is too low, and as a result your spare tax code allowances are used by interest, then all you need to do is update your estimated pension income via your Personal Tax Account and a new tax code will be recalculated.

1spiral

Dazed_and_C0nfused said:

If HMRC's estimate of your pension income is too low, and as a result your spare tax code allowances are used by interest, then all you need to do is update your estimated pension income via your Personal Tax Account and a new tax code will be recalculated.

It was only a few pounds each month so not worth the hassle. What I didn't understand was why they kept making the tax code = my pension. If they had just left it at the 1257 default code, I wouldn't have been deducted tax, nor would they have had to rebate it at a later date. All seemed a bit pointless to me.

Albermarle

1spiral said:

Dazed_and_C0nfused said:

If HMRC's estimate of your pension income is too low, and as a result your spare tax code allowances are used by interest, then all you need to do is update your estimated pension income via your Personal Tax Account and a new tax code will be recalculated.

It was only a few pounds each month so not worth the hassle. What I didn't understand was why they kept making the tax code = my pension. If they had just left it at the 1257 default code, I wouldn't have been deducted tax, nor would they have had to rebate it at a later date. All seemed a bit pointless to me.

It does seem very strange, normally you just get the £12570 code if you have no other income.
As suggested have a look online at your personal tax account and you might be able to spot what the issue is.

EthicsGradient

Albermarle said:

1spiral said:

Dazed_and_C0nfused said:

If HMRC's estimate of your pension income is too low, and as a result your spare tax code allowances are used by interest, then all you need to do is update your estimated pension income via your Personal Tax Account and a new tax code will be recalculated.

It was only a few pounds each month so not worth the hassle. What I didn't understand was why they kept making the tax code = my pension. If they had just left it at the 1257 default code, I wouldn't have been deducted tax, nor would they have had to rebate it at a later date. All seemed a bit pointless to me.

It does seem very strange, normally you just get the £12570 code if you have no other income.
As suggested have a look online at your personal tax account and you might be able to spot what the issue is.

Perhaps they do it that way for people getting more than one pension - then one pension has exactly the amount they think it needs for no tax, and the difference from £12,570 is used for the 2nd pension. Yes, if you only have one pension, it creates extra paperwork.

zagfles

Albermarle said:

1spiral said:

Dazed_and_C0nfused said:

If HMRC's estimate of your pension income is too low, and as a result your spare tax code allowances are used by interest, then all you need to do is update your estimated pension income via your Personal Tax Account and a new tax code will be recalculated.

It was only a few pounds each month so not worth the hassle. What I didn't understand was why they kept making the tax code = my pension. If they had just left it at the 1257 default code, I wouldn't have been deducted tax, nor would they have had to rebate it at a later date. All seemed a bit pointless to me.

It does seem very strange, normally you just get the £12570 code if you have no other income.
As suggested have a look online at your personal tax account and you might be able to spot what the issue is.

No, this is known issue with the PAYE system. Given this thread I suspect the PP gets a few thousand in interest income. The way the PAYE system works is if say expected pension income is £10,000 and expected interest income is £3000, the tax code of the pension gets reduced to exactly cover the pension because the rest of the PA gets used up by the interest income.

This is of course complete nonsense, because if the pension incomes rises a bit, it'll get taxed, when no tax is due, because the interest will be covered by the £1000 PSA and the £5000 starting rate.

Technically interest will use up the PA before the PSA and starting rate, but that's irrelavent, the purpose of a tax code is to ensure as far as possible the correct amount of tax gets deducted. 

So the way the PAYE system works for people with pension/employment income below the PA and with saving income is sheer stupidity which creates hassle for both taxpayers and HMRC staff. I'm sure if the system was fixed with fairly simple software changes, it'd save 10 or 100 times as much as it currently costs in wasted HMRC staff time

1spiral

zagfles said:

No, this is known issue with the PAYE system. Given this thread I suspect the PP gets a few thousand in interest income. The way the PAYE system works is if say expected pension income is £10,000 and expected interest income is £3000, the tax code of the pension gets reduced to exactly cover the pension because the rest of the PA gets used up by the interest income.

That's exactly my situation. The interest takes me above 12570 but not high enough to make me a tax payer so I just end up in this loop of paying tax that gets rebated.

Ocelot

pecunianonolet said:

Dazed_and_C0nfused said:

pecunianonolet said:

Ozzig said:

Hoenir said:

pecunianonolet said:

Does anyone know if there is a different way to request a list of reported interest rather than calling and waiting hours to get through?

Keep a list yourself or suffer the wait on the phone. Alternatively employ somebody to do it for you. 

The catch is your list may be different from the list they have. I know mine was.

Exactly this is the reason and because I don't trust HMRC not 1 millimetre. They sent me a letter telling me about my new tax code and untaxed interest but it doesn't make any sense to my own record. 

The interest deduction in your tax code doesn't necessarily reflect the interest received though.

For some people it will a reduced amount 

For example where the interest is £2,000 this might result in a coding deduction of £2,000.  Or £1,500.  Or £1,000. Or numerous other amounts.

Correct, but neither the interest reported matches nor the reduction or anything else. Messing with tax codes is a never ending cycle and I need to put a stop to this before it gets out of hand (again). If they think I am due tax or underpaid, give me the number and I pay and they can leave me in peace after. I had 8 tax code adjustment letters already this tax year and we still have 3 months to go. Some due to their own mistakes. 

That's quite a lot of letters. Generally, I have had 2-3 a year for the last seven years.